Legislature(2003 - 2004)
03/27/2003 01:37 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 160
"An Act relating to the emission control permit
program; relating to fees for that program and to the
accounting of receipts deposited in the emission
control permit receipts account; and providing for an
effective date."
ERNESTA BALLARD, COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL
CONSERVATION testified in support of the legislation. She
read from prepared testimony as follows:
Mr. Chairmen and members of the committee, thank you
for the opportunity to testify today on behalf of the
Governor's air permit reform legislation, HB 160.
Governor Murkowski is committed to enhancing Alaska's
economy through resource development. He is equally
committed to protecting Alaska's environment. It is
not an either/or proposition. A strong economy will
generate the revenue base to continue funding our
important regulatory programs. Without a strong
economy we cannot hope to have a strong government.
Over the last 30 years, we have learned much about the
environmental and health hazards associated with air
pollution. We have also learned much about emission
control technologies, air modeling and protective
ambient air standards. Through national and state
legislation we have recognized our shared value of
environmental protection along with the many other core
values that form the framework for government
regulatory programs. Environmental protection is not
incompatible with resource development. Rather, it is
as fundamental a component of resource development as
are labor and worker safety laws.
Governor Murkowski and members of his Cabinet recognize
that Alaska's laws taken together form the framework
for a successful resource development strategy.
Environmental laws are one of the many equally
important pieces of the public policy mosaic. They are
no more, and no less important. This bill will improve
the process and function of underlying state policy to
protect the environment. It does NOT change the
protective standards already in place and administered
by the Department through existing regulation.
Through DEC's proposed FY 04 budget we intend to
sharpen our focus on our core responsibilities. House
Bill 160 is essential to achieving the results promised
in our budget proposal. HB 160 achieves permit reform.
As you can see - reform requires attention to detail.
The bill is long with many reference changes. Reform
means re-engineering the way we do business. These
proposed changes in law will substantially change the
mechanisms of permitting. Moreover, the bill makes way
for many more changes that we can accomplish through
revised regulations. The ultimate result will be a
timely, predictable and rational program that will meet
business and development needs without sacrificing air
quality.
Our legislative proposal is based on two important
developments of the last several years. One was a
benchmarking study conducted by the department. We
reviewed the funding and workforce allocation in the
air programs of states that we consider comparable in
workload and complexity to Alaska. Alaska has an
unusual air program. Although we have a small
population, we have a high number of air permits: as
many operating permits as the State of Colorado, and as
many major new permits as the state of New Jersey. We
discovered in our benchmarking study that we simply
have not funded, staffed or organized our program
adequately to do the job applicants expect. House Bill
160 and the program increase proposed in the Governor's
budget will allow us to remodel our permit program in
line with successful programs in other states.
The second development that guided our proposal was the
Air Permit Work Group - a stakeholder group convened
last year. The Work Group carefully reviewed our
program against the federal Clean Air Act and the EPA
rules that have been amended several times establishing
new programs and control concepts. Our state
permitting program has not kept pace with the national
regime or the needs of Alaskan communities and
industry. The Work Group report is in your packets and
the work group recommendations are incorporated into HB
160.
Specifically, this bill:
· Creates a predictable, timely and rational permitting
program.
· Changes how we regulate minor sources using more
standardized permit conditions based on best management
practices. Our present "permit by rule" program works
for the oil drilling rigs. We want to expand the
concept and apply it to more situations. For our
population size, we have many more mobile and portable
plants and machinery than most states. We need the
tools to work with this unusual but essential fleet.
· Exempts sources from permitting to the extent allowed
under federal law.
· Streamlines permitting for the major sources in Alaska
by matching our procedures to those in federal rules.
· Achieves efficiency through adopting federal rules by
reference - this will make it much easier for us to
permit rural power plants - we will be able to use the
so-called "clean unit test" to avoid a detailed site by
site technology analysis.
I want to take some time to explain our zero fiscal note.
The bill itself does not warrant a significant increase
in staffing. However, reform and streamlining alone will
not obtain the desired result. On-time permitting in a
fast changing resource development climate can only be
achieved through a combination of reforming the process
and increased staff. Without additional staff, the
important changes achieved through the legislation cannot
be delivered.
We are asking for an increment in the Governor's FY 2004
Operating Budget to increase staffing for permitting and
field functions and to hire contractors to handle fluxes
in permitting demands - both critical components to
achieving overall success.
The direction in which I am leading the department is
based on my commitment to develop sound, understandable
standards, spend time in the field and enforce the law
when it is necessary to achieve compliance.
I have proposed additional staffing in this program to
fulfill my commitment. A well run air permit program is
essential to the economic and social well being of our
state. I also want you to know that while we are
increasing this very important program, we have looked
closely at our mission and have reduced our services so
that we are only providing those that are essential to
our mission of protecting public health and the
environment. With this increment as well as several
other small increases in core permitting programs the
department still has an overall net reduction of 13
positions and $153,000.
Co-Chair Harris MOVED to adopt the Committee Substitute for
HB 160 (FIN), Work Draft (23-GH1059\D). There being NO
OBJECTION, it was so ordered.
Co-Chair Harris referred to the fiscal note (#1, DEC,
3/3/03) and asked if the numbers were correct.
Commissioner Ballard clarified that the new fiscal note
(3/26/03) was actually a zero fiscal note. She explained
that in preparing the initial fiscal note, the department
followed instructions to reflect that the amount was
included in the FY 04 budget and would therefore be "zeroed
out". She noted that a subsequent meeting with Co-Chair
Williams' staff clarified that the appropriate course of
action was actually to prepare a zero fiscal note.
Co-Chair Harris asked if positions would be added and
pointed out that seven new positions reflected in the
previous fiscal note did not now appear on the new fiscal
note.
Commissioner Ballard responded that new positions were
intended to implement the new program. She maintained that
the legislation could not be properly implemented without
additional staff and that staff needed the new legislation
to improve the permitting program.
Co-Chair Harris referred to the previous fiscal note and
asked about funds to be received from the Clean Air
Protection Fund.
Commissioner Ballard clarified that the Federal Clean Air
Protection Act established a permit program, paid for
through permit fees. She stated that collected fees would
offset the entire cost of the budget request increment. She
did not feel it was appropriate for the Department to raise
fees in order to upgrade the program.
Co-Chair Harris contended that the previous note was more
appropriate. He noted, however, that although the spending
was increased, the program did not seem to impact the
overall governmental budget.
In response to a question by Co-Chair Harris, Commissioner
Ballard responded that the seven new positions would work
with existing positions in an entirely new program.
Co-Chair Harris asked for a definition of a major versus a
minor source. Commissioner Ballard responded that a major
source might be a power plant, whereas a minor source might
be an asphalt plant.
Representative Joule asked about the differences between the
Committee Substitute and the original bill. Commissioner
Ballard deferred to Mr. Chapple. She noted the Department's
review and support of the Committee Substitute.
TOM CHAPPLE, DIRECTOR, DIVISION OF AIR AND WATER QUALITY,
DEPARTMENT OF ENVIRONMENTAL CONSERVATION provided
information regarding key changes in the Committee
Substitute.
Mr. Chapple referred to Section 12, on page 5 of the
Committee Substitute, sub-section (f), pertaining to
facilities exempt from permitting. He noted the language
change of "exempt or defer", since some federal rules speak
of deferring a source if a permit were required at a later
point. He also referred to Section 13, line 12 of the same
page, pertaining to construction permits. He noted that
current statute indicates numbers regarding quantity per
year of emission, but left some criteria to regulation. He
explained that the changes specified the federal cutoff
values, linking it to the federal regulation.
Mr. Chapple also referred to page 7, Section 15 of the bill,
line 21, where a new sub-section (2) is added, dealing with
monitoring, record keeping and reporting requirements. He
noted that the new provisions linked with federal rules
about monitoring permits.
Mr. Chapple then referred to Section 25, on page 12, under
"General minor permits". He briefly defined these permits,
and stated that the section allowed general permits for
minor sources. He noted previous confusion over the permit
holder. He maintained that the language clarified the
permit user.
Mr. Chapple also referred to Section 26 under Temporary
operations. He referred to line 27, changing the number from
thirty to ten days. He noted that federal rules had not
been drafted at the time of the original bill, and that the
federal rules now specifies ten days, a time period which
also corresponds to industry needs.
Mr. Chapple referred to Section 54, page 23, which defines
the term "modification". He noted that the citation was
more specific in federal regulations, and that the new
language corresponds to federal regulation.
Mr. Chapple referred to Section 59, on page 25, which adds
definitions of "major modification" and "major stationary
source". He also referred to Section 62, page 25, which
adds a new sentence placing a requirement on the department
to adopt regulations recently adopted by the Environmental
Protection Agency (EPA). He emphasized that the regulations
were important to the state of Alaska.
Co-Chair Harris asked if the Department had received
statewide feedback from various groups regarding the
legislation.
Mr. Chapple responded that they had heard predominantly from
the Stakeholder Group, representing the oil and gas and
mining industries, as well as members of the Prince
Williams' Sound and Cook Inlet advisory councils. He noted
that those parties engaged in substantive discussion about
the bill throughout the late summer and early fall.
Co-Chair Harris asked about the differences between the
modified Alaskan statute and federal law in terms of
emission standards.
Mr. Chapple stated that the bill did not change "out of
stack" limits, which still exist along with ground level
limits, also known as ambient public health standards. He
stated that the bill merely streamlined the process for
timely permitting and attained efficiencies by better
imitating federal standards. He explained that one
efficiency moved "minor sources" from the major source
permitting program and created a new, streamlined program.
Mr. Chapple also stated that the Committee Substitute
reflected conversations between the Sponsor and the
Department, and that provisions had been thoroughly examined
by DEC staff and the Department of Law.
MARILYN CROCKET, DEPUTY DIRECTOR, ALASKA OIL AND GAS
ASSOCIATION (AOGA) testified in support of the bill. She
explained that her organization was a trade association of
seventeen oil and gas companies in the state of Alaska. She
observed that the oil and gas industry had long been
involved in the air permitting process and an active
participant in the aforementioned discussions to revise the
state's regulatory program. She noted that the revised
process allowed timelier permitting and more clearly defined
fees. She also observed that the new program more clearly
resembles the federal program.
Ms. Crocket noted two changes in the Committee Substitute to
which AOGA took exception. She noted a citation error in
referring to federal rules: page 25, lines 2 and 5,
referring to 40 CFR.165 and .166, should read 51.165 and
51.166.
Representative Foster MOVED to accept the technical changes
[CFR 51.165 and CFR 51.166] to the Committee Substitute.
There being NO OBJECTION, it was so ordered.
Ms. Crocket also referred to page 7, lines 21-25, pertaining
to monitoring and reporting requirements. She noted the new
language "but which may be supplemented by additional
requirements that". She suggested that the language was not
consistent with the recommendations of the Work Group. She
noted the great challenge of monitoring and reporting
requirements. She observed that Alaska's terrain and
climate might sometimes result in additional or other
monitoring requirements. She summarized that the oil and
gas industry did not anticipate that the recommendation
would add additional monitoring requirements, but rather
enhance flexibility to take into account Alaska's situation.
Mr. Chapple noted that the words that were developed in the
Work Group were "take into account Alaska's unique
conditions". He suggested that a change had occurred in the
drafting process. He suggested that the words "supplemented
by additional requirements that" be omitted.
Representative Croft suggested "additional or different
requirements" as a possible solution.
After further discussion by Committee members, Ms. Crocket
suggested that the sentence might read "but which may be
modified to take into account this state's unique
conditions".
STEVE MULDER, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW,
testified via teleconference. He stated that either
solution would be acceptable, but recommended the option of
"additional or different".
Co-Chair Harris recommended the solution of "but which may
be modified to take into account", as suggested by Ms.
Crocket.
Representative Whitaker asked whether the intent was to
establish a limitation as to compliance with record keeping,
reporting and monitoring requirements. He speculated that
the goals were for specificity and clarity.
Mr. Chapple clarified that the intent was to be consistent
with federal regulations, while allowing flexibility to
respond to Alaska's unique conditions.
In response to a question by Representative Whitaker, Mr.
Chapple confirmed that this would provide more certainty to
applicants as to requirements.
Representative Croft emphasized that the bill did not change
the overall standards. He referred to Page 9, which lists
the substantive standards, and differentiated this from
reporting requirements, which required more flexibility in
Alaska.
Co-Chair Harris pointed out that "modify" did not preclude
additional requirements.
There being NO OBJECTION, the Committee Substitute was
amended to read "but which may be modified to take into
account this state's unique conditions" (page 7, lines 24
and 25).
TADD OWEN, EXECUTIVE DIRECTOR, RESOURCE DEVELOPMENT COUNCIL
(RDC) testified via teleconference in support the amended
version of the Committee Substitute. He read from a
prepared statement as follows:
Thank you, Mr. Chairman. For the record my name is Tadd
Owens, I am the executive director of the Resource
Development Council. RDC is a private, non-profit,
business association representing individuals and
companies from Alaska's oil and gas, mining, timber,
tourism and fisheries industries. Our membership also
includes electric utilities, local communities and
Native regional and village corporations. RDC's mission
is to help grow Alaska's economy through the
responsible development of the state's natural
resources.
RDC supports the amended version of House Bill 160 and
we ask the House Finance Committee to move the
legislation forward. I would like to thank DEC for not
only establishing a Work Group to evaluate the
department's air permitting program, but also for
taking action on that group's recommendations. While
RDC did not formally participate in the Air Program
Work Group, several of our members did and we endorse
their recommendations.
Working in cooperation with the regulated community,
DEC has successfully addressed many of the air
program's major weaknesses and inefficiencies. HB1 60
provides DEC with additional flexibility in
administering the air program and it simplifies the
permitting process for those in the regulated
community.
Specifically, this bill accomplishes the following:
• It allows DEC's program to remain consistent with the
federal program on a long-term basis
• It differentiates between major and minor source
permits and standardizes the requirements for minor
permits
• It restructures the program's fee schedule making the
costs more transparent and predictable for applicants
In or view, this legislation will result in more
efficient review of permits allowing agency staff more
time and resources for the field work necessary to
protect Alaska's air quality. HB1 60 also creates a
much more user-friendly process for those in the
regulated community. The legislation has RDC's strong
support.
HENRIK WESSEL, ENVIRONMENTAL OFFICER, GOLDEN VALLEY ELECTRIC
ASSOCIATION testified in support of the Committee Substitute
and thanked the Working Group for their recommendations. He
noted that his group was a non-profit cooperative serving 90
thousand residents. He commended the legislation for
streamlining the permitting process, while still protecting
the environment.
Representative Foster MOVED to report CSHB 160 (FIN) out of
Committee with the accompanying fiscal note. There being NO
OBJECTION, it was so ordered.
Committee Substitute HB 160 (FIN) was REPORTED out of
Committee with a "do pass" recommendation and a new zero
fiscal note from Department of Environmental Conservation.
TAPE HFC 03 - 39, Side B
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